Black listed countries in Latvia in 2018

In the meeting of State Secretaries was presented the draft Regulation regarding low tax or tax-free countries and territories.

From January 1, 2018 instead of 63 countries, the following 27 countries shall be acknowledged as low tax or tax-free countries:

Antigua & Barbuda

Virgin Islands (USA)

Commonwealth of the Bahamas

Bahrain

Brunei Darussalam

Commonwealth of Dominica

Republic of Djibouti

Republic of Ecuador

Grenada

Guam (USA)

Jamaica

New Caledonia (French Republic)

The Hashemite Kingdom of Jordan

Republic of Kenya

Labuan (Malaysia)

Lebanese Republic

Republic of Liberia

Macau (People's Republic of China)

Republic of Maldives

Democratic Republic of São Tomé and Príncipe

Saint Pierre and Miquelon (French Republic)

Saint Helena Island

Tahiti

Kingdom of Tonga

Republic of Vanuatu

Republic of Venezuela

Zanzibar (United Republic of Tanzania)

The new Latvian Corporate Income Tax Law, which will enter into force in January 1, 2018, establishes that the tax rate will be increased for all payments received from and transferred to low tax or tax-free countries and territories.

Now CIT 15% rate has to be applied and paid in the state budget, but starting from 2018, the tax rate will be increased. For management and consultancy service payments now 0% tax rate is applied, however from 2018 the rate of 20% will have to be applied.

In case these payments will be transferred to low tax or tax-free countries and territories, instead of 15%, the 40% tax rate will be applied. Therefore offshores are losing their advantages and privileges.

To find out more about black listed countries in Latvia, Lithuania and Estonia, please contact our English speaking lawyers at info@gencs.eu.